Nigeria’s Securities & Exchange Commission Releases Statement on Crypto and Bitcoin

Nigeria’s Securities & Exchange Commission Releases Statement on Crypto and Bitcoin

The Central Bank of Nigeria’s ban of Bitcoin and broad cryptocurrency has thrown the capital market regulator – Securities & Exchange Commission (SEC) – off balance. The regulator just like that, is pausing a component of its on-the-money initiative, SEC’s Capital Market FinTech Strategy: “For the purpose of admittance into the SEC Regulatory Incubation Framework, the assessment of all persons (and products) affected by the CBN Circular of February 5, 2021 is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system.”

Consequently, it has become necessary to provide the following clarifications about the implementation of SEC’s Capital Market FinTech Strategy:

  1. For the purpose of admittance into the SEC Regulatory Incubation Framework, the assessment of all persons (and products) affected by the CBN Circular of February 5, 2021 is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system.

  2. The planned implementation of the SEC Regulatory Incubation Guidelines for FinTech firms who intend to introduce innovative models for offering capital market products and services will continue.

First Bank has also followed with an email to its customers, making it clear that it would close accounts linked to cryptocurrency exchanges: “please be informed that any account identified as transacting in or operating Cryptocurrency exchanges within our system will be closed accordingly.” Yes, do not say that you were not warned.

Further to its earlier directives that dealing in Cryptocurrencies or facilitating payments for Cryptocurrency exchanges is prohibited, the Central Bank of Nigeria (CBN) has written the letter: BSD/DIR/GEN/LAB/14/001 dated 5 February 2021, to direct that all banks, non-bank financial institutions and other financial institutions should identify persons and/or entities transacting in or operating Cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.

The full SEC statement

The Securities and Exchange Commission (SEC) has received several comments and inquiries from the public on a perceived policy conflict between the SEC Statement on Digital Assets and their Classification and Treatment of September 11, 2020 and the Central Bank of Nigeria (CBN) Circular of February 5, 2021. We see no such contradictions or inconsistencies.

In recognition of the fact that digital assets may have the full characteristics of investments as defined in the Investments and Securities Act 2007, the SEC Statement asserts that trading in such assets falls under SEC’s regulatory purview, except proven otherwise. The primary objective of the Statement was not to hinder or stifle innovation, but to establish standards of ethical practices that ultimately make for a fair and efficient securities market.

The SEC made its statement at the time, to provide regulatory certainty within the digital asset space, due to the growing volume of reported flows. Subsequently, in its capacity as the regulator of the banking system, the CBN identified certain risks, which if allowed to persist, will threaten investor protection, a key mandate of the SEC, as well as financial system stability, a key mandate of the CBN.

In light of these facts, we have engaged with the CBN and agreed to work together to further analyse, and better understand the identified risks to ensure that appropriate and adequate mitigants are put in place, should such securities be allowed in the future.

Consequently, it has become necessary to provide the following clarifications about the implementation of SEC’s Capital Market FinTech Strategy:

  1. For the purpose of admittance into the SEC Regulatory Incubation Framework, the assessment of all persons (and products) affected by the CBN Circular of February 5, 2021 is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system.
  2. The planned implementation of the SEC Regulatory Incubation Guidelines for FinTech firms who intend to introduce innovative models for offering capital market products and services will continue.

The SEC will continue to monitor developments in the digital asset space and further engage all critical stakeholders with a view to creating a regulatory structure that enhances economic development while promoting a safe, innovative and transparent capital market.

 

February 11, 2021

Securities and Exchange Commission

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2 thoughts on “Nigeria’s Securities & Exchange Commission Releases Statement on Crypto and Bitcoin

  1. Who supervises the CBN? Or we just assume that the institution is good enough to regulate itself? Nothing shows that it’s anywhere near that level. Now SEC is telling you that they understood the CBN and its ‘facts’, and would work together to resolve whatever whatever. The whole press release sounded unintelligent, nothing meaningful there.

    Nobody has explained where the CBN draws its powers to unilaterally decide on who should operate a bank account here and who shouldn’t, without court a order. Our own democracy is really special, that is why things that are reprehensible appear normal here.

    Now you are meant to believe that the CBN is protecting you from harm and harassment, while leading you into the future of abundance and prosperity.

    Nobody gets punished for doing a bad job or making poor judgments here, so even if the managers destroy everything, they will still be entitled to awards and remunerations, for ‘meritorious’ service to the nation of course…

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